PLM Prompt: Is Free the Future of PLM?

PLM Prompt: Is Free the Future of PLM?

There are a lot of buzzes now debating future business models of “Free”. I had chance to read Chris Anderson book “Free” over the weekend. My thinking today is that freemium model is still having long way to go and most of the providers today are still in single digit revenues.

free-plm

What I was thinking is that freemium business model can solve a problem of Product Lifecycle Management user adoption rate. Finally, the most effective price is no price at all. So, providers of PLM software will be competing to provide quality software to get market share. Successful ones will have after, option to receive premium revenues for extended portfolios…

What do you think about it? Does it make sense?

Best, Oleg.

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  • Steve Calvert

    There has to be a way to make money. Making money is NOT bad. Maybe, PLM companies can attract business by charging for hard drive space required.

    Steve

  • Steve, Making money is ok, of course. Some companies are making a lot of money and provide software for free. My point is that part of the market develops perception about free software. And the biggest question if this perception will come to enterprise in any way… Best, Oleg

  • A lot of the vendors offering commercial support (i.e., paid support) for open source software aren’t doing as well as first hoped for with the possible exception of RedHat. I think enterprise companies will always charge a price, but it’s the model that will change, e.g., SaaS.

  • I agree with Steve, the new model has to allow a reasonable return on time and monies invested by the software developer. Even in open source, software development and marketing is not free. There has to be enough profit in the model, to fund the development of constant innovation and high quality. The enterprise business software market however is on a collision course with “Free”. it cannot be avoided…. because the buyers are being educated to expect all software and IT services are for free (LinkedIn, FaceBook, Linux, MySQL, Internet Explorer… lots of good software and services that we all use everyday). We (software developers) can try freemium, SaaS, open source or a number of other business models, but in the end, the first company to figure out how to profitably deliver really great software, that is distributed with zero or near-zero cost of sales, will dominate the enterprise business market segment. My vote is with the commercial support model. William is correct, this model has not worked well yet, with the exception of Redhat, but the sample size is too small, and we can’t blame all company failures on the model. Lots of companies using the traditional software license sales and SaaS models are also failing today.

  • MarcL

    Free is certainly appealing, but think what’s really being discussed is the alternate way of acquiring enterprise software (specifically PLM). The “pay hundreds of thousands or millions up-front before the company even knows if it can be deployed succesfully” way of doing business is being challenged by alternative options such as freely available enterprise open source where the license cost is eliminated and companies only pay for proven value “as delivered”.

    The open model and the SaaS model are based on a subscription format that removes the ‘cost of entry’ risk and introduce the ability to actually prove out an enterprise PLM solution before corporate commitment.

    Seems like the approach is more viable than the deep discount / give away model that the other major PLM systems providers have been undertaking over the past years… which seems to me as a sure route to long term business and market implosion.

    Just my 2 cents, what’s your take?

    MarcL
    http://www.aras.com

    [Oleg] Marc, I’m sorry. You comment somehow got into junk-list by WordPress. I agree with you. Upfront cost is one of the biggest problem PLM is trying to resolve with OSS and SaaS. Both can work in my view and we discussed it in the past. I think companies and users will make their choice. If I’d be bigger company, my way to think will be closer to OSS and in case of smaller companies SaaS will be way to go… Best, Oleg

  • William, Thanks for your comment! I think enterprises that went on open-source software route see in this option some cost reduction in comparison to a licensed version of software. Therefore, I’d not expect them be ready to pay the same level of money for this “commercial support”. I think, current move to discuss a new business model is about how to find appropriated model to charge enterprises and keep perception of “free software” that heavily developed over the past few years… Best regards, Oleg.

  • Peter, Thanks for your insight! I like how you present need for a balanced model and agree, we are not there yet. Nevertheless, perception of “free” is here. Regards, Oleg

  • Oleg, This morning I was reading the Boston Globe story about Google vs. Microsoft. The story hints that Microsoft will soon release “Free” Office on-line to compete with Google, and Google will develop “free” Chrome operating system to compete with Windows. The collision with Free for all of software is coming quickly.
    I understand Google advertising model, but I cannot see how Microsoft will make money selling Free software. For enterprise business software, PLM, ERP, CRM… maybe the answer is just consulting services. Perhaps we’ll soon see HCL, Satyam, CSC, Wipro buying software companies – then distributing the s/w for free to sell consulting services.

  • Peter, Thank you for your note. Actually, I’ve been writing new blog post this morning about my predictions with regards to new coming technologies from MS Office 2010… Thanks, Oleg

  • I think many companies are overlooking the fact that giving away free stuff does work. The act of doing so does in fact generate more traffic for the business. And as we all know, traffic leads to more business and thus more revenues. So give! Even if it’s for free.

  • Michael, Actually, I’m very agreeing with you. Giving away can improve product quality and product adoption rate. And this eventually can lead to an additional business.
    Thanks for your comment! Best, Oleg

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